Working from my phone I see I should have addressed an important point which came up with a close friend two days ago:
The guy was going to add to a large position in NGL on a dip.
I told him that he was recognizing a temporary price point as though it represents a fixed value when in reality, it offers nothing but a moment's percieved value. There is no way of arriving at an absolute valuation when it comes to stocks! Value is influenced and controlled by humans attaching value to various components one might attach to a company's stock offering.
I told my friend to buy first thing in the morning which he did. And as I thought about my counsel I, too, picked up 500 units of NGL myself.....on margin, no less! I paid $14.245 as I recall. And if units drop under that tomorrow morning, I'll add again.
Prices we pay should not be based on false or contrived valuations but on just two things:
1. Can I afford it at the going price?
2. Does my vision of its eventual value represent a solid exit strategy I'll find rewarding?
I rely upon margin much of the time as it extends my financial reach. I favor high yielding plays provided the yield exceeds my rate of margin interest. Working it this way I very rarely come out on a losing trade.
So if NGL drops in the morning, I'll be there nibbling on 200 to 300 units. If units slide further I'll want to fatten up.
I'll post each trade as it unfolds in the hope that others will see opportunity and we can prosper together.
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